Beats and Apple Creating a Music Streaming Service for Rivaling Spotify

Apple Inc. is making perhaps the most prominent and biggest change to its music strategy in years and moving ahead sweeping renovation of its digital music service, which would enable the firm to compete directly with streaming services such as Spotify. Almost a year after the iPhone maker had purchased the maker of a streaming music service and hip headphones Beats for $3 billion, the company is now working alongside Beats executives and engineers for introducing its own subscription streaming service. It is also in the plans of the firm to introduce an enhanced iTunes Radio, which would be tailored to the preferences of listeners in the regional market.

According to people with knowledge of the company’s plans, if the American technology giant is successful in its venture, it would mean that splashy new albums will first become available on iTunes rather than elsewhere. It is to be noted that Beats is vital in the overhaul of Apple’s digital music as a musician has been made a point man by the firm for reshaping the music app of the iPhone in order to include the streaming music service rather than an engineer. According to two employees of Apple working on the project, the chief creative officer of Beats and the front-man of the Nine Inch Nails, Trent Reznor has been given the responsibility of redesigning the music app.

However, the most telling part of Apple’s role is the lack of one important feature; a lower subscription than competing services. Several music executives of the Cupertino, California company said that Apple had recently tried, but failed to convince record labels to reduce their licensing costs. This would have enabled Apple to sell subscription to its customers for a price as low as $8 a month, a reduced one as compared to the $10 that’s charged by rival services such as Rdio, Spotify and Rhapsody.

Even though $2 isn’t really a huge reduction, the failure of the iPhone maker to secure it shows the change in its relationship with the music industry. Once, the company had enjoyed enormous negotiating power because it had been a dominant force in digital music and had pioneered it a decade ago through music downloads. Now, the company has to encounter a number of competitors and has found itself in a position where it needs to modernize its offerings in order to stay in line with the streaming revolution.

Thus, the firm’s leverage has weakened in the industry and the labels are extremely pleased with it. According to analysts, Apple had to struggle for lowering the price of its subscription service because it came too late to the streaming game. The company is used to being the leader rather than the follower and this is one of the few times that it had to play catch-up, which means it’s without a position of strength. Nonetheless, the shift is quite important because more and more users have now moved onto the concept of streaming rather than going for music downloads.